Awash Insurance Company (AIC) has come to an agreement with Deloitte East Africa for the latter to design a 10-year strategic plan and a 10-year performance road map dubbed "Transforming Awash Insurance - Vision 2030". Awash is the first insurance firm to hire a foreign consultant.
The two firms kicked off the project at a ceremony held at the Hilton Addis Hotel on January 21, 2021, three days after an agreement between the duo was signed. The latest project will be the fourth such strategy to be implemented by the firm, with the third strategic plan set to expire in June 2021.
Deloitte is expected to finalise the strategy in three months. Besides, it will provide support to the insurance firm for a year in implementing the strategy. However, the international consulting firms entering such deals with several of the banks paid between 600,000 dollars to 800,000 dollars.
Deloitte, which provides audit, consulting, financial advisory, risk advisory, tax and legal services with approximately 312,000 professionals globally, won the project after vying with eight firms. Floated on March 26, 2019, the tender for the service had drawn the attention of international firms including KPMG, PwC and Ernst & Young.
Deloitte was chosen after considering the firm's vast experience in similar projects and an agreeable asking price, according to Workneh Mekonnen, project manager at Awash, which has managed to boost its net profit by 31pc to 209.8 million Br during the past fiscal year.
The selection might have come sooner if negotiations had not been interrupted by the Novel Coronavirus (COVID-19) pandemic, according to Workneh.
Deloitte is expected to identify gaps in the insurance firm's operational procedures, suggest improvements, develop a 10-year strategic document and draw up a 10-year performance road map. It will also provide strategic monitoring and evaluation support to the company, according to the contractual agreement.
The transformation has three major phases, according to Joe Eshun, CEO of Deloitte East Africa, which operates under Deloite Consulting, that earned 46.2 billion dollars in revenues in 2019.
These are defining the vision and road map, project governance, and monitoring. The first phase will be focused on assessing the environment in Ethiopia and determining what choices are most likely to succeed, according to Joe.
Recently, Deloitte East Africa was hired by the Ministry of Finance as a transaction advisor to oversee the partial privatisation of Ethio telecom.
Ashish Desai, insurance sector leader for consulting who attended the kickoff ceremony virtually, explained that he expects the Ethiopian market to slow. Still, the firm that cooperates with Awash is expected to point out the sectors and competitive advantages that must be embedded within the business for growth.
Awash Insurance, which had 588 employees and 57 branches by the end of the last fiscal year, is hardly the first to contract a foreign firm to develop a strategic plan. Experts differ in their opinions about outsourcing such work.
Addis Alemayehu, a financial consultant, believes that insurance firms outsource the development of strategic plans due to a directive the central bank enforced around three years ago, which indicates that two percent of a company's profits should be disbursed for training and development of employees to cultivate skilled labour in the country.
He argues that companies hire foreign firms because they can provide training, taking care of the central bank's requirements while developing a strategic plan.
Several banks, including Hibret, Bank of Abyssinia, Awash, Dashen, Zemen and Nib, have hired international consultants to develop strategies and road maps. KMPG, Delloite and PricewaterhouseCoopers East Africa (PwC) were all hired by the banks for these purposes.
Bezabih Bekele (PhD), an assistant professor of management at Addis Abeba University, also suggested that local companies choose foreign firms to perform their work because there is a lack of skilled and modern consulting firms in the country.